Pennsylvania County’s Dreams of Wealth Didn’t Work Out

By Roben Farzad on June 07, 2012

Four years ago, as the economy was entering a devastating recession, swaths of rural Pennsylvania were booming.

Energy companies were using hydraulic fracturing, better known as fracking, to tap the vast natural gas reserves of the Marcellus Shale underlying much of the Keystone State. In Wayne County, these corporations offered struggling farmers lucrative leases for mineral rights.

“Land here became a whole different asset class,” says Tim Meagher, a real-estate broker whose family settled in the area in the 1840s.

Today there is no drilling in Wayne County, Bloomberg Businessweek reports in its June 11 issue. The Delaware River Basin Commission, a regional regulatory agency, has declared a moratorium while it studies the environmental impact. Gas companies have invoked force majeure clauses to put their contracts with property owners on hold.

Investors who bought farmland are stuck, and farmers who expected to retire on gas royalties are back to eking out a living from agriculture.

Meanwhile, fracking opponents are brandishing the example of Wayne County as they fight shale energy exploration across the country.

The number of drilling permits issued in Pennsylvania soared from 122 in 2007 to 3,337 in 2011, according to the Marcellus Center for Outreach and Research at Penn State University. Much of the activity was concentrated in the western and central parts of the state, which have a history of energy exploration and geology conducive to gas production.

Fresh Land

As the price of gas climbed, drillers looking for fresh land started eyeing the verdant, rolling pastures of Wayne County in (26452MF) the northeastern part of the state.

Companies such as Hess, Chesapeake Energy (CHK) (CHK), and Cabot Oil & Gas (COG) (COG) dispatched “land men” to go door to door to persuade homeowners to sign mineral leases. Farmers were getting $250 to more than $3,000 an acre to allow drilling on their property, says Meagher. Land that sold for $2,000 to $3,000 an acre in 2004 was going for as much as $10,000 an acre by 2009. Meagher says he often got calls from prospective investors in Manhattan, Boston, and beyond. To encourage more, he put property ads in the New York Post, New York Times, and the Wall Street Journal.

“I wanted to get my clients here the highest possible bid,” he says.

By the summer of 2009, a joint venture of Hess and Newfield Exploration (NFX) (NFX) had secured leases for 80,000 acres with the Northern Wayne Property Owners Alliance, a group of 1,500 landowners formed to negotiate with the gas companies.

’People Here Struggle’

“It’s the biggest thing ever happened around here, in my lifetime at least,” says Alliance member Bob Rutledge, a dairy and beef farmer whose family has been in Wayne for 170 years. “People here struggle. The economy here sucks when it’s good. The farms are dying.” Spokesmen for Hess, Chesapeake, Cabot, and Newfield declined to comment.

Honesdale, the county seat, last saw a boom like this in the 1820s, when it was the starting point for the new Delaware & Hudson Canal. In March 2009, Leonard Schwartz, recently retired as chief executive officer of chemical company Aceto, reopened Honesdale’s 182-year-old Hotel Wayne. He gutted and redecorated its rooms and upgraded its restaurant and bar to accommodate out-of-town speculators and energy company officials with expense accounts.

“The gas companies were giving out money,” says Schwartz. “People were buying tractors, eating out. You felt it.”

Opposition Builds

As fracking fever spread, opposition to gas exploitation was building. In the spring of 2008, a gas company offered Josh Fox’s family almost $100,000 to drill on its Wayne County property, inspiring Fox, a filmmaker, to make the anti-fracking documentary “Gasland.”

The Oscar-nominated film, which shows water from a faucet catching fire, was shown on HBO and helped foment broader opposition to fracking. Fox and an alliance of conservation groups called on the Delaware River Basin Commission to ban the practice in Wayne County. They argued that the drilling technology, which involves injecting high-pressure jets of water and chemicals into underground rock formations, would pollute the river’s 14,000-square-mile basin, a source of drinking water for 15 million people.

Permits Ordered

In May 2009 the commission, which includes the governors of Pennsylvania, New Jersey, Delaware, and New York as well as a representative from the U.S. Army Corps of Engineers, declared that gas companies wanting to drill in Wayne County would need a permit from the DRBC as well as from the state of Pennsylvania.

Land men started pulling out of Wayne, according to local townspeople. A year later the commission announced that it would not issue permits and would study the impact of fracking.

The decision caught farmers and investors off guard.

“I had never even heard of this out-of-state commission,” says Jim Stracka, a contractor from Scranton, Pennsylvania, who joined with two New Jersey businessmen to form a company called Gasaholics to invest in Wayne County.

In 2008, Gasaholics paid $900,000 in cash for a 96-acre farm in northeastern Wayne. Stracka says he expected to lease his mineral rights for at least $3,000 an acre and hoped a producing well might generate as much as $50,000 a day in royalties.

“We went on that premise,” he says. “Then, the moratorium comes out of left field and the leases stop. Now we’re just sitting on it.”

The property remains vacant. A local farmer stops by on occasion to cut the land’s overgrowth for hay.

No Royalties

Rutledge fared better. Hess-Newbridge paid him $300,000 for the right to drill on his farm. Even so, he’s bitter at the prospect of not receiving royalties. He says his farm can’t compete with corporate operations, and that he’s been selling timber from his land, as well as portions of a century-old stone wall.

“The DRBC,” he says, “isn’t writing me a check. They’re just basically saying ‘screw you.’”

Drilling is not officially dead in Wayne County. In February 2011 the DRBC held 18 hours of public hearings at three locations to take testimony on draft regulations and received 69,000 submissions during a two-month public comment period, according to spokesmen Clarke Rupert and Kate O’Hara.

The commission scheduled a hearing for Nov. 21, 2011. Fox showed up with 2,000 protesters, but the meeting was canceled and has yet to be rescheduled.

‘Technical’ Meetings

A statement on the commission’s website says that as of May the commissioners are “convening meetings with their respective technical staff” as they consider rules for drilling.

As fracking continues in most of Pennsylvania, Wayne County residents are recognizing that public-works improvements tied to a gas boom aren’t going to happen.

“We expected better roads,” says Myron Uretsky, a retired New York University professor who owns a house in the town of Damascus, Pennsylvania. “We have no fire hydrants -— the gas companies were going to put them in.”

While many residents blame Fox for their troubles, he says they were naive to think drilling would ever be allowed in such an environmentally critical area. He faults the gas companies for dangling money in front of farmers without warning them of the potential problems.

“It was all sweetness and light,” he says. “‘You’ll make so much money.’ That’s exploitation, not prosperity. This was a bubble.”

To contact the reporter on this story: Roben Farzad in New York at rfarzad@bloomberg.net

To contact the editor responsible for this story: Josh Tyrangiel at jtyrangiel@bloomberg.net

Source

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USA: Attorney General Seeks to Prevent Future LNG Terminals Near RI

The Weaver’s Cove LNG terminal project was abandoned over a year ago, in June 2011, but Rhode Island Attorney General Peter F. Kilmartin continues his effort by seeking standards that would help prevent such a project in the future.

On Wednesday, Kilmartin, joined by Massachusetts Attorney General Martha Coakley, renewed a request to the federal government for rules for the location and siting of LNG import and storage facilities. Wednesday’s request comes in the form of an appeal filed in connection with an earlier petition for rulemaking directed to the Pipeline & Hazardous Materials Safety Administration within the United States Department of Transportation (USDOT).

This is the latest step in a petition that was first filed in September 2004. In early February, a lower official in the USDOT had denied the original request.

In support of the request, Attorney General Kilmartin stated, “While the State obviously had concerns about Weaver’s Cove’s proposal to construct an LNG facility in a densely-populated urban environment in Massachusetts, with tanker traffic transiting through actively-used Rhode Island waters, within close distance of populated shorelines, Rhode Island’s motives were – and remain – much more broad. Indeed, these motives apply to any number of other locations in close proximity to populated areas and heavily-used waters of Rhode Island on which future LNG developers may set their sights. The petition expresses concern not just about whether a single project goes forward, but over the need for USDOT to set standards that apply to any number of sites that could put Rhode Island’s citizens and natural resources at risk.”

Kilmartin added that “USDOT has continually failed to establish minimum safety standards for determining the location of LNG facilities and has only established minimum federal safety standards for the design of those facilities. We seek to correct this to prevent another unsuitable proposal like Weaver’s Cove in the future.”

The Weaver’s Cove LNG facility was proposed in December 2003 and became the target of an 8-year fight waged by the Attorney General’s office and other state officials to protect Narragansett Bay from hazards and closures.

Kilmartin said, “While that fight reached a successful conclusion when the developer withdrew the proposal in June of 2011, we do not want to have to have a repeat of that threat.”

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Why Wind Power Doesn’t Live up to its Environmental Promises

By MasterResource | Wed, 18 January 2012 01:33

“I cannot abide the suggestion that we must sacrifice our environment in order to save it. This is an absurd argument enabling this energy imposter’s invasion of delicate habitat with little return. … Environmentalists must consider the possibility that industrial wind, by its failure to perform to stated goals, does not then qualify for this sacred consideration.”

The heavily funded and admittedly effective U.S. industrial wind lobby portrays its product as descending from old-world windmills. Close your eyes and you’ll surely imagine these magnificent machines gently turning in the breeze … each kilowatt arriving at your reading lamp courtesy of a rosy–cheeked Hummel child.

Existing solely to save the planet by generating clean, affordable and environmentally friendly electricity, you can be sure that any addition to the plant owner’s bank account is purely accidental.

Hogwash!

In reality, the U.S. industrial wind business was rescued by Ken Lay and Enron with quick, low-risk profit as its core goal. As Gabriel Alonso, chief executive of Horizon Wind Energy LLC – one of America’s biggest wind developers, often reminds his employees … their goal isn’t to stage a renewable-energy revolution … “This is about making money!”

Once a Believer

I was not always this cynical. I wanted to believe that industrial wind would replace fossil fuelled power plants and, until two years ago, defended its arrival here. Like many West Virginians, I wanted the destruction of our mountains by those who profit from the blue diamond stopped … NOW!

I believed industrial wind offered the best opportunity to accomplish that goal and, even recognizing industrial wind also consumes our forest lands, it seemed an excellent alternative to the coal industry’s horribly destructive mountaintop removal mining process.

Sadly, once the layers of woulds, coulds and shoulds were peeled back, I found industrial wind failed to keep its environmental promises. Save the canned boilerplate responses to criticisms, the wind industry offered nothing conclusive to demonstrate it would significantly reduce emissions or close fossil fuelled plants. There is no conclusive evidence that one coal plant has been closed as a direct result of the installation of tens of thousands of wind turbines. Not one! I’ve asked advocates to name one facility. Answer … zippo!

I fully expect advocates to point to many studies which validate their woulds and shoulds. But the studies they point to carry their own fair share of woulds and shoulds as well.

We’re even asked to disregard the increased emissions generated by fossil fueled plants as they inefficiently try to compensate for wind’s constant variability and accept that, on their word alone, when the wind is blowing, a coal plant, somewhere, is not running. That’s equivalent to some self-appointed Giraffe Control Officer bragging that not one has been spotted in Charleston during his watch.

Consider this measure instead. US industrial wind capacity at the end of 2010 exceeded 40,000 MW. The U.S. has some 490 coal power plants with an average size of 667 MW. A direct one-to-one trade would have closed some 60 coal plants. Again … name one!

Bringing this closer to home … Edison Mission Energy is heavily invested in Appalachian coal-fired power plants even as it grows its Appalachian wind plants. Can we expect Edison to replace its fossil plants as it opens wind plants with equivalent MW capacity? Will any of the major players holding significant interest in both fossil fueled plants and wind plants make this commitment? I suggest they will not, as long as there is profit to be made from each.

The sad truth is that industrial wind does not replace fossil-fueled electricity generators. It does not reduce emissions. It does not provide affordable, on-demand electricity. The relatively miniscule amount of electricity generated typically arrives when it’s not needed and cannot effectively be stored. Industrial wind, true to Ken Lay’s intent, is a profit center founded on favorable legislation, mandated renewable energy goals and funded by taxpayer subsidies.

Conversion Experience

I did not come to the “dark side” willingly. At the suggestion of a friend, I attended a presentation on industrial wind at which the speaker systematically destroyed any notion that industrial wind has earned a seat at the US energy table.

Expecting yet another NIMBY rant, the presenter [ed. note: John Droz Jr.] instead based his case that industrial wind is a failed technology on science alone. There was little mention of view-shed, bat/bird kills, noise or health issues, all of which I’ve since learned are serious issues in their own right. The presenter focused primarily on the poor performance and high cost of industrial wind and the fact that it could never replace current generators, my main reason for initially supporting industrial wind.

Knowing that the two key representatives of our proposed wind plant were introduced as being in the audience, I could hardly wait for the question-and-answer session. This was going to be a knock down for the ages! Just wait until they set this clown straight!

Then, the presenter wrapped up and said the magic words I’d been waiting for … Any Questions? My gladiators stood up and walked out! Not a word! No defense! How could they let this brutal attack stand?

That was my turning point. Suspicion drove me to read any article I could find about industrial wind, and the more I learned the more I disliked these monstrous contraptions which were scheduled to invade my Appalachian Mountains by the tens of thousands.

What I Have Learned

Before this event, I was willing, like many of my friends, to sacrifice a mountain view, some bats and birds and even the hard earned tax dollars these wind folks would pick from my pocket if it meant the greater good would be served.

What I learned, however, lead me to the conclusion that there is no trade.

• Coal plants will continue to exist at pre-wind levels and the mines will remain open in order to supply them.
• Emissions will not be reduced as a result of industrial wind. When asked if wind power was reducing carbon emissions, Deb Malin, a Bonneville Power Authority Representative, answered, “No. They are, in fact, creating emissions.”
• Not only will the surface destruction brought about by mountain top removal mining not be reduced as a result of wind plants, industrial wind will bring destruction well above the ground in areas not previously impacted by mountain top removal.
• The cumulative impact of long stretches of deadly 450 foot tall whirlybirds along our fragile mountain ridges will set a deadly gauntlet for many migratory species with no real benefit to show for the sacrifice.
• The arguably unnecessary remote wind installations require long runs of forest fragmenting high power lines required to bring the occasional electricity generated to a point of use.
• My picked pocket only serves to benefit the wind developers.

I cannot abide the suggestion that we must sacrifice our environment in order to save it. This is an absurd argument enabling this energy imposter’s invasion of delicate habitat with little return. Sacrifice is, after all, a forfeiture of something highly valued for the sake of something one considered to have a greater value or claim. Environmentalists must consider the possibility that industrial wind, by its failure to perform to stated goals, does not then qualify for this sacred consideration.

Affiliations

My comments here are my own. I am a member of the Board of Directors for the Allegheny Highlands Alliance, but do not speak for the organization in this commentary. I serve as editor of the Allegheny Treasures blog, an amateur site intended not to answer questions, but instead to stimulate discussion of industrial wind among readers, as I hope to do in this piece.

I arrived at my opinions after all consideration to the argument presented by the American Wind Energy Association (AWEA) and other industrial wind support groups. I’ll be the first to admit I could be wrong, as I was when I supported industrial wind just two years ago. If a persuasive argument can be made to sway me back, I assure you I’ll happily move.

But I should warn you, the argument must begin with a list of coal- plant closings and not easily manipulated speculative “data.” Empty promises will not justify consuming even one more square inch of Appalachian forest.

Oh, before I’m criticized on the property rights issue … I firmly believe that you should be allowed to do anything you wish with your property as long as it brings no harm to others. But whatever you choose, don’t ask me to underwrite your adventure with my tax money in the form of subsidies, grants, or any other considerations from which you profit.

Beyond NIMBY

I am not insulted at the NIMBY (not-in-my-back-yard) moniker the wind advocates apply to me. I would take it one step further and suggest they call me a NOPE (not-on-planet-earth)!

I believe we are all responsible for our environment and must challenge every intrusion. We cannot accept, without question, the possibility that what has been portrayed as a solution may, in fact, create additional ills, no matter how much we want to believe.

Moving the country away from fossil fuels is one thing; choosing an alternative with no proven track record in accomplishing this effort, especially one with industrial wind’s potential for serious environmental destruction is quite another.

By. Michael Morgan

Michael Morgan is a “no party” West Virginian with a self-described “nose for nonsense.” A semi-retired Project Management and Transportation Consultant, he worked as Transportation/Materials Manager for an international manufacturer of large hydro turbine equipment and, before that, as Materials Manager with a Fortune 500 company.

“While I can’t claim to be an environmentalist,” Morgan adds, “growing up along the Allegheny Front dictates a respect for the environment and demands scrutiny of any intrusion.”

Source

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USA: Alliance to Protect Nantucket Sound Releases Statement Regarding Cape Wind Energy Deal

Yesterday, Audra Parker, President & CEO of Alliance to Protect Nantucket Sound released a statement regarding SJC uphold of Cape Wind energy deal.

“Today’s ruling is a blow to ratepayers, businesses, and municipalities who are being asked to bear billions of dollars in new electricity costs when other green energy alternatives are available at a fraction of the cost.

The good news is the increasingly clear reality that Cape Wind will never be built. Cape Wind has been denied FAA approval, has been denied critical Federal loan guarantees, has no utility willing to buy half its power, and cannot find investors. Those facts alone render this decision moot.”

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UK: Trump Demands Public Inquiry into Proposed Offshore Wind Farm

DONALD Trump has asked the Scottish Government to hold a public inquiry into plans for a windfarm off the coast from his £750million golf resort.

The property tycoon claims 11 giant turbines erected at a European Offshore Wind Deployment Centre in the North Sea, would be visible from his controversial links course at Balmedie, Aberdeenshire.

Trump has already heavily criticised the plans and wrote to First Minister Alex Salmond saying that the proposal was “environmentally irresponsible”.

And now his lawyers have contacted Energy Minister Fergus Ewing requesting a hearing into the plans.

A letter, sent by Ann Faulds of legal team Dundas and Wilson, read: “A public inquiry into the proposed development is necessary to explore all material considerations, and to ensure a proper evidential base to inform Scottish ministers’ determination of the application.

“In particular, the potential economic impact of the proposed development on my client’s development, and by extension the regional and Scottish economy, has not been addressed in the environmental statement submitted in respect of the application.”

Trump’s son, Donald Jnr said he feared the public had not fully understood the impact the turbines could have and added: “I don’t think the public realise how close to the shore they are going to be, so I think there needs to be a hearing.”

But the windfarm, one-and-a-half miles from the course, and a £150million joint venture between utility company Vattenfall, engineering firm Technip and Aberdeen Renewable Energy Group, has generated hundreds of letters of support.

By Stephen Wilkie (express)

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USA: Cape Wind Opponents Get Lot of Donations

Cape Wind’s main opposition group said contributions to its cause surged by 22 percent last year as its donor base broadened amid rising concerns about the offshore energy project’s cost.

The Alliance to Protect Nantucket Sound raised $1.8 million in 2010, up from $1.4 million in 2009, according to the nonprofit’s federal tax return. Emboldened by a recent court victory and rejection of U.S. loan backing for the 130-turbine project, the group said it’s on track for another fundraising gain in 2011.

“We’re definitely seeing a resurgence of support. We’re definitely on the upswing,” said Audra Parker, the Alliance’s CEO. “The better people feel about our momentum, the better our fundraising will do.”

The Hyannis-based group is trying to keep up with skyrocketing legal bills — $1.3 million last year compared to $500,000 in 2009 — through a series of direct mailings to its 5,000-strong donor base and summertime cocktail receptions catering to deep-pocketed supporters on the Cape and Islands. Money has also flowed in via Facebook and Twitter.

“The legal expenses have been huge,” said Parker, a Barnstable resident who joined the group in 2003 and became CEO in 2009. “We’ve shifted phases from more of a regulatory process to court cases.”

The Alliance’s donations fell by half in 2009 to the lowest level since the group started in 2002. But the cash comeback started after details about Cape Wind’s cost to ratepayers — an estimated $2.7 billion over 15 years — emerged when state utility regulators approved the project in November 2010.

“That really changed the playing field, where it was once a Cape and Islands issue … and now it’s become really a statewide issue,” Parker said. “We definitely have more donations coming in … from off-Cape and from individuals who are very upset about the high cost of power.”

By Greg Turner (bostonherald)

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USA: Fight for Nantucket Sound Continues

You could almost detect the gritty glee in Audra Parker’s statement when, as president of the Alliance to Protect Nantucket Sound, she said: “This represents a major setback for an already struggling project,” regarding the recent appeals court decision — the alliance filed the appeal — that further delays the implementation of the country’s first offshore wind farm, Cape Wind.

Like Ali and Frazier, this represents another round in the epic battle of Sound vs. Wind.

The decision rendered on Oct. 28 by the U.S. Court of Appeals for the District of Columbia (former members include John Roberts and Ruth Bader Ginsburg) is important because the court is considered the second most important behind the Supreme Court.

Principally, because of its “often exclusive jurisdiction” to hear “challenges to … environmental protections” issued by federal agencies, such as the Federal Aviation Administration, Cape Wind is running out of legal options. The FAA is now required to further review the project — it has reviewed the matter for eight years — to determine (as it has previously done) that the turbines pose no threat to aviation.

With aerial anticipation, the alliance is sensing a final knock out.

Citizen advocate groups, single-issue social artifacts, like the alliance, are typically created to profess opposition to, raise awareness of, and are ultimately organized for, elimination of public projects (ironically, created for public benefit) or societal ills, of which, locally, Cape Wind is public enemy No. 1.

For the alliance and its neighboring cousin, Windwise-Cape Cod, among others, rejection is often an easier form of political expression than proposition. The statements they make and alternatives they offer are overly simplistic and are sometimes consumed with more emotion and hyperbole than intelligence and should be challenged as much as the assumptions offered by Cape Wind and other wind projects.

Sheila K. Bowen, president of Windwise, recently wrote of industrial turbines that “they are not environmentally responsible.” Does any thoughtful person, who is serious about energy policy, especially “green” or “clean” energy, really believe that? With that line of reasoning one should come to the same conclusion that the use of combustion engines in school buses, emitting carbon monoxide and hydrocarbons, is also not “environmentally responsible.” Stop the buses!

The alliance says “other green initiatives like energy efficiency and alternative power sources, including land-based wind and hydro, can provide power and save the environment at half the cost of Cape Wind.” Preposterous. Do they factor into their calculus that significant upgrades (read, cost) need to be made to transmission lines from an already taxed grid, from places like Maine and Vermont?

Further still, they also support land-based wind projects “when appropriately sited” and in the “general interests of the local community.”

Additionally, “land-based wind is often more favorable than offshore wind due to better economics, less risk and the existence of a regulatory process.” Translation: not happening. Ask the residents of Brewster, Bourne and Falmouth if they believe there are favorable, appropriate sites in their towns.

Should Cape Wind proceed, the alliance believes, citing what should be a questionable Beacon Hill Institute study, that “a loss in property values of $1.35 billion” can be expected and “a reduction in tourist spending of $57 million to $123 million” should be feared.

Finally, the alliance touts “upgrades to existing power plants” (will Parker agree to pay more for the cost?), “deep-water sites” (think Deepwater Horizon), “management of consumer demand patterns through peak-load sharing or shifting” (elaborate how) and “renewable options that can produce constant, reliable generation with lower transmission costs” (what are the options?).

The reality is that there are few options. But Cape Wind, perhaps not economically proficient at the moment, is a viable one. Solar energy provides a cost of nearly double that of offshore wind energy and recent bankruptcies of Evergreen and Solyndra — financed with taxpayer dollars at the local and national levels — is rarely mentioned by those opposed to Cape Wind as a sensible option. Nuclear energy, in the wake of the Fukushima Daiichi troubles, does not seem politically expedient either.

So, opponents of Cape Wind, provide better, more detailed options for powering our homes, gadgets and lifestyles, considering our increasing, insatiable demand.

As Sound and Wind take to their respective corners, it is not known when the next round will be, but it is certain that the match, like all fights, will be determined by judges. Sadly, that is a reflection of our flawed and failed energy policies.

James P. Freeman of Orleans is a financial services professional.

By James Freeman (capecodonline)

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NIMBY: Nobody wants the natural gas terminal near them

Amiram Barkat

Minister of National Infrastructures Uzi Landau will not forget that day in July 2010 for a long time. The regional planning and building committee gathered for a decisive session to discuss “the northern entrance” plan at Dor Beach. The plan included building a pipeline to the offshore Tamar well, which was the Ministry of National Infrastructures’ top priority target. This was at the height of an aggressive and at times violent struggle with local residents, which included throwing of oranges and tomatoes at meeting participants. Landau, who was convinced that the plan would be approved, preferred to spend the day touring the north. However without him being there, the government suffered an embarrassing defeat. A coalition put together to reject the plan from local authority representatives, environmentalists and “renegade” government representatives won by a slight 11-9 majority. The local council instructed the government to examine other locations for the gas terminal, headed by a facility on a rig at sea.

Landau’s nightmare is probably going to repeat itself soon. The national master plan to build gas treatment facilities is back on the table for discussion at the regional planning and building committee’s meeting. Noble Energy Inc. (NYSE: NBL) promoted the previous plan and people critical of the plan were furious about the “privatization” of such a sensitive facility. In July 2010, it was decided that the Ministry of National Infrastructures would take over responsibility for planning. Almost 18 months later, the National Outline Plan #37 for natural gas has reached the end of the initial examination to find an alternative location for the facility. Over the next few months, the alternative sites will be subjected to a strict selection using an advanced environmental survey. The sites that pass will be considered for final approval by the council. Next Monday, alternatives will be presented to the public at a conference titled, “Energy and the Environment,” organized by the Society for the Protection of Nature in Israel (SPNI) at the International Convention Center (Binyanei Hauma) in Jerusalem.

1. Why is a gas facility necessary?

Electricity rates have risen over the past few months by 15% as a result of disruptions in natural gas deliveries from Egypt, which were caused by attacks on the main Sinai pipeline. In addition to Egyptian gas, the Israel Electric Corporation (IEC) (TASE: ELEC.B22) uses Israeli natural gas from the Mary B well in the offshore Yam Tethys gas field, which will be replaced in a year or two with the Noa and Tamar wells. Damage to the underwater pipeline which carries gas from Israeli wells deep in the sea would be much more harmful to Israel than the stoppage of gas deliveries from Egypt, and could even cause electricity prices to double. Egypt has been meeting only 15% of Israel’s needs to produce electricity. Israeli gas supply is expected to produce 70-80% of the state’s electricity. Building a gas treatment facility is intended first and foremost to lessen the probability that such a catastrophe could occur.

Until not long ago, all electricity in Israel was produced form coal, diesel and fuel oil. Natural gas is cheaper, and pollutes less, than the other fuels, but it is much more sensitive to breakdowns during delivery. As opposed to coal and liquid gasoline, there is no way to technically store gas near power stations and therefore it is channeled directly from the wells in the depths of the sea to the station through pipes underwater and above land. Before it can move from an underwater pipeline to the above land pipes, the gas must go through a process to remove water and other materials that mixed with the gas, as well as a reduction in pressure from 450 to 110 bar. Currently this process takes place in two locations: a sea rig that is 22 km from the Ashdod coast reduces the gas’s pressure and a small treatment facility near Ashdod port cleans the gas. This system works well, but is extremely vulnerable to enemy attack, technical mishaps or even earthquakes that could significantly damage it. Fixing problems at sea is also extremely expensive and can last for months, during which time Israel would be without gas. As a result, everyone involved in the energy industry agrees that Israel cannot increase the level of usage and how much it relies on gas without building another reception terminal in northern Israel. Israeli environmental organizations also support the idea in theory since gas is the only alternative currently available to the IEC, which needs to supply the power stations now being powered by coal, such as the one the IEC plans on building in Ashkelon.

2. The government prefers building a facility in Haifa Bay

A planning team headed by Gideon Lerman found 20 land-based sites that could be appropriate for building a gas treatment facility. The 20 potential land-based sites are along the coast from Rishon LeZion in the south, the Wingate Institute, Hadera and Caesarea (five locations), Dor Beach area (nine locations), Petroleum & Energy Infrastructures Ltd. (PEI) in Haifa Bay, Kfar Masaryk, and the area south of Acre where the Frutarom plant used to be. The team examined each area using technological criteria, including gas treatment on land as well as at sea on a rig. The team also checked six locations for building a sea facility and decided that due to the surface quality, it is possible to build the facility no more than 7.5 km from the beach. As a result, the facility will be visible from land, detracting significantly from the view of the sea. If the facility would be stationed off the Tel Aviv coast, the structure would be a visual hazard visible from the Herbert Samuel boardwalk in the south to Herzliya in the north.

At the end of the examination, the team recommended preparing two sites for the facility in the north, at least one of them being north of Hadera. The two sites that were found to be the most fitting were Frutarom and PEI. The team determined that these were the only sites that were fitting to house an entire land-based facility.

In the past that Delek Group Ltd. (TASE: DLEKG) was considered to be behind the deal to buy the Frutarom factory according to an assumption or information that this site would be the government’s preferred location. The team, however, was more impressed with the second option – PEI’s container farm. The 350 dunam (86 acre) complex is located between Kiryat Haim in the north and the industrial area in the south. In the past, there were plans to build a residential neighborhood on this land. The benefits of building the facility on the PEI farm are that it is not near a nature reserve, does not obstruct a view, is not near a water desalination plant, and is near a beach not used for bathing. The PEI site received the highest marks among the eight land-based locations for its environmental suitability, as well as for the usability of the land. The Frutarom site on the Acre coast came in second, and the Hadera power station in third.

3. The residents want a sea-based facility only.

At a recent energy conference organized by “Globes,” Ministry of National Infrastructure Natural Gas Authority Chairman Shuki Stern said, “At every National Outline Plan #37 meeting there are people outside of the building protesting against the government planners. The planning issues are complex and social and environmental organizations have a lot to say. Even I was personally attacked.” Despite this, Stern said, “There will be social and environmental ramifications to bringing natural gas to Israel. We cannot bring it in by air.

Tomer Rona, spokesman for the public protest against gas installation in the Acre area, said, “We do not accept any alternative that includes building a land-based facility – certainly not here at Frutarom or at other sites, such as PEI, which is slated to be a residential neighborhood.”

Globes: “Are you against all the options?

Rona: “We are in favor of building a sea-based facility. Even the smallest 20 dunam land-based facility would be dangerous, since very quickly it would grow to 105 dunam and there would be no way to stop it. The planners are already speaking about the option of expanding. Storage and recycling facilities will be established and the entire area will become an area for heavy industry.”

Globes: It is said that your struggle is a NIMBY (Not in my back yard) issue and that you are just protecting your real estate value.

“We are not a NIMBY protest, despite the fact that our backyard is already full of factories. We are talking about real life threatening dangers and there are plenty of examples of catastrophes and are tens of thousands of people in danger.”

Planner Gideon Lerman said in response that the option of only building a sea-based facility is technically possible, but extremely problematic with respect to reliability. “The biggest problem is long-term operations. The technology has not yet been proven successful, even though the world is moving in this direction. There is one such rig in Holland (out of 140), and a few in the Gulf of Mexico (out of thousands). They have full back-up if there is a technical problem.”

Master plan representatives told “Globes” that residents’ concerns that the site could become an industrial area is understandable, however, “the chance of this occurring depends to a large extent on the location that will be chosen.” They also said that security issues were also taken into consideration, but that a land-based facility has an important advantage since faulty equipment can be repaired easier and quicker. “When there is a problem at a land-based facility, it can be remedied in an extremely short period of time. It takes three years to build a new sea facility.”

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